tag:blogger.com,1999:blog-6245381193993153721.post1620056288488682068..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Rothbard’s Non-Refutation of Administered PricesLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6245381193993153721.post-50233663932083016072014-03-30T22:07:42.902-07:002014-03-30T22:07:42.902-07:00Sorry, I'm still generally learning this stuff...Sorry, I'm still generally learning this stuff. But if firms decide they wish to use mark up pricing, and hold prices constant, by adjusting their inventories, wouldn't an Austrian say that this is just an EXAMPLE of dynamic changes in supply? Aka if demand increases/decreases, firms change their subjective valuation of what quantity they would supply, thereby offsetting the potential change in price due to demand, and holding it at a constant "mark up" price? Please correct me if I'm wrong, I am just learning this stuff and want to understand!J.P.noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-43353005395034077952014-02-01T17:51:55.002-08:002014-02-01T17:51:55.002-08:00You don't address my last point: A firm may ...You don't address my last point: A firm may choose to adopt AP because this is the profit maximizing strategy given the parameters it faces.<br /><br />Have any of the various studies that you like to quote that indicate that a majority of firms practice AP gone on to analyze the reasons why firms choose the pricing strategy they do?Rob Rawlingsnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-59166110505157083242014-02-01T11:40:25.503-08:002014-02-01T11:40:25.503-08:00When -- to pick one of the many surveys at random ...When -- to pick one of the many surveys at random that report much the same findings around the world -- a well-sampled survey of 725 firms in Norway finds that about 69% of Norwegian businesses and firms set their prices as a mark-up over costs (Langbraaten, Nina, et al. 2008. “Price-setting Behaviour of Norwegian Firms – Results of a Survey,” Norges Bank Economic Bulletin 79.2, p. 26), this is very strong evidence that my position is right.<br /><br />We don't need to remain "outside observers" when such very good empirical evidence is available.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-8142596729799920012014-02-01T10:19:01.129-08:002014-02-01T10:19:01.129-08:00You talk as though firms that make quantity adjust...You talk as though firms that make quantity adjustments rather than price adjustments in response to a change in demand must be using administered pricing.<br /><br />Such behavior is however also consistent with profit-maximization. A firm that is a price taker on the input side, faces low storage costs and elasticity of demand such that it would have to reduce price by a lot to "clear" its stock will clearly maximize profit by increasing inventories when demand falls and reducing output in the next period<br /><br />If (by chance) the maximizing rate of profit such a firm could make happened to be equal to the mark-up desired by a company that practiced AP then an outside observer would not easily be able to tell what kind of pricing algorithm a firm used just by watching it's pricing and quantity decisions.<br /><br />A firm that always faces low storage and elasticity and knows the average rate of profit in its industry may in fact choose administered pricing BECAUSE this is a profit-maximizing strategy - constantly changing prices and output levels would simply add to its costs.<br /><br />Rob Rawlingsnoreply@blogger.com